February 1, 2018 Newsletter

Dear Friends,

Tangents:
February – the month of purification among the ancient Romans (Latin februum,”purgatation”)

POINTS OF PROGRESS:
NORWAY
In 2017, sales of electric or hybrid cars (52 %) outpaced sales of new gas or diesel-powered cars.  The country’s ambitious goal is to ban sales of gas-reliant cars by 2025.  The Norwegian government is offering tax cuts and other incentives, including free or subsidized parking and charging, and reduced road tolls, to achieve its goal. -Quartz.

CHINA
The country  – the world’s largest importer of elephant tusks – banned ivory sales early this month.  Although not all environmentalists approve (some predict it will drive traffic in ivory to countries such as Laos), others applaud the move.  Peter Knights, chief executive of WildAid, called the new legislation “the greatest single step toward reducing elephant poaching. -CBC

NEW YORK
Between 2011 and 2016, community gardens were created on 36 vacant lots, when advocacy group 596 Acres circulated a list of unused spaces available for public use.  The movement to inform residents of vacant lots that they may not have realized were open to the public use has since spread throughout the United States and to Australia, Canada, Brazil, England and Germany. -World Economic Forum.
PHOTOS OF THE DAY

A paddle boarder on Loch Lomond as wintery conditions return in Tarbet, Scotland.
CREDIT: JEFF J MITCHELL/GETTY IMAGES

A Panel from the First Class smoking room of the Normandie. ‘Les Sports’ 1935 on display at the V&A in London as part of a major exhibition – Ocean Liners: Speed and Style which will re-imagine the golden age of ocean travel, exploring the design and cultural impact of the ocean liner on an international scale.
CREDIT: JULIAN SIMMONDS FOR THE TELEGRAPH

A super blue blood moon rises over hills near the city of Yuzhno-Sakhalinsk on Sakhalin Island, Russia.
CREDIT: SERGEI KRASNOUKHOV/TASS/GETTY IMAGES

The European flag is projected onto the town hall at the Grand Place in Brussels, Belgium, during a light and sound show to mark the launch of the European year of cultural heritage 2018.
CREDIT: EMMANUAL DUNAND/AFP
Market Closes for February 1^st, 2018

International Markets

Bonds

Currencies

Commodities

Market Commentary:
On this day in 1975, Bill Gates and Paul Allen finish writing the first BASIC language program for a personal computer and license it to Micro Instrumentation and Telemetry Systems of Albuquerque, NM, the maker of the Altair 8800 PC.
Number of the Day
10
The Dow Jones Industrial Average has risen for ten consecutive months, the longest winning streak since the 12 months ending February 1959.
Canada
By Kristine Owram
     (Bloomberg) — Canadian stocks fell to their lowest close since October after a 4th day of declines, while government bond yields rose to the highest since mid-2014.
     The S&P/TSX Composite Index lost 91 points or 0.6 percent to 15,860.92. The 4-day retreat was the most in nearly a year.
     Energy stocks lost 0.6 percent as the gap between Canadian crude prices and West Texas Intermediate hit the widest since 2013. Financials fell 0.6 percent and health-care stocks tumbled 4.4 percent, led by a decline in cannabis shares.
     The only sector that rose was technology, which added 2.6 percent. Shares of Open Text Corp. jumped 13 percent, the most since 2015, after earnings and revenue beat the highest analyst estimate.
     In other moves:
                          Stocks
* Saputo Inc. fell 2.6 percent after the dairy company’s 3Q earnings missed the lowest analyst estimate
* Stella-Jones Inc. lost 8.2 percent, the most since 2008. The company’s principal shareholder is selling 5m shares at C$48.50 through a secondary offering
* Aimia Inc. tumbled 25 percent, the most since June, after selling its Nectar loyalty program for what one analyst called a “remarkably low price”
                          Commodities
* Western Canada Select crude oil traded at a $30.45 discount to WTI, the biggest gap since 2013
* Gold rose 0.4 percent to $1,344.30 an ounce
                          FX/Bonds
* The Canadian dollar strengthened 0.4 percent to $1.2269 per U.S. dollar, the highest since September
* The Canada 10-year government bond yield rose eight basis points to 2.37 percent, the highest since May 2014
US
By Jeremy Herron and Sarah Ponczek
     (Bloomberg) — U.S. stocks and Treasuries fell in tandem Thursday ahead of a slew of technology earnings, as the threat of higher rates from the Federal Reserve continued to rattle equity markets coming off their best month since March 2016.
     The Nasdaq 100 Index bore the brunt of the selling as the tech-heavy gauge headed for its worst week since June. Amazon.com Inc. tumbled before its earnings, with Apple Inc. and Alphabet Inc. also fell on results that disappointed.
     Other major averages notched modest retreats in an up-dand- down session that actually saw the CBOE Volatility Index decline. The Dow Jones Industrial Average gave up all of a 150- point advance only to eke out a gain in the final minutes of trading. Rate-sensitive real estate and utility shares led the S&P 500 Index to a third drop in four days.
     While earnings drove individual stock moves, a resumption in the bond selloff weighed heaviest. The 10-year yield spiked to just under 2.79 percent, the highest level since April 2014, renewing speculation that pain in the bond market would spill over into equities. The dollar also fell, losing 0.5 percent against major peers.
     “The performance of the bond market has got to be beginning to flash red to equities,” Mark Heppenstall, chief investment officer of Penn Mutual Asset Management, said by phone. “Just the strength of rally in the equity market is going to bring the Fed more and more into play this year. It seems we’re reaching a critical level on interest rates that could throw some cold water on the party in the equity market.”
     Treasury weakness spread to European sovereign debt amid solid manufacturing data from the region, while earnings sent . The pound increased a third day alongside the euro, though U.K. numbers disappointed. Oil retook $65 a barrel and gold pushed higher. The dollar slumped.
     Investors are weighing the path of monetary policy at a time of synchronized global growth and rising corporate profits that’s pushed equity gauges to unprecedented levels and sent benchmark bond yields to the highest in almost four years. The Fed on Wednesday acknowledged stronger growth, expressed more confidence that inflation will rise to its 2 percent target, and set the stage for a March interest-rate increase.
     “The equity market has been selling off the last couple days in terms of understanding that rates are going to go higher and higher,” Wade Balliet, chief investment strategist at Bank of the West, said by phone. “Given some of the massive gains we’ve had in the last nine years, as rates trickle higher, that puts a little bit of nervousness in the equity market that we may not have as good a year as we had in 2017.”
     Elsewhere, oil rose and gold retreated as Bloomberg’s commodity index headed for a fourth consecutive drop. And following a miserable January Bitcoin slipped below $9,500.

     Here are some important things to watch out for this week:
* U.S. employers probably added more jobs in January than a month earlier, economists forecast before the Friday report.
* Technology earnings continue with Apple Inc., Alphabet Inc. and Amazon.com Inc.
     And these are the main moves in markets:
                          Stocks
* The S&P 500 Index fell 0.1 percent to 2,821.96 at 4 p.m. in New York.
* The Nasdaq 100 fell 0.7 percent, while the Dow Jones Industrial Average rose 0.1 percent.
* Facebook Inc. rose 3.3 percent and Microsoft slipped 0.8 percent.
* The Stoxx Europe 600 Index fell 0.5 percent to the lowest in four weeks.
* The MSCI Asia Pacific Index gained 0.3 percent.
* The MSCI Emerging Market Index sank 0.5 percent.
                          Currencies
* The Bloomberg Dollar Spot Index fell 0.5 percent.
* The euro advanced 0.3 percent to $1.2456, the strongest in more than three years on the largest gain in more than a week.
* The British pound increased 0.3 percent to $1.423, the strongest in more than a week.
* The Japanese yen declined 0.4 percent to 109.59 per dollar, the weakest in more than a week.
* South Africa’s rand declined 0.3 percent to 11.8863 per dollar.
* The MSCI Emerging Markets Currency Index decreased 0.2 percent.
                           Bonds
* The yield on 10-year Treasuries increased eight basis points to 2.7877 percent.
* Germany’s 10-year yield advanced two basis points to 0.72 percent, the highest in more than two years.
* Britain’s 10-year yield climbed two basis points to 1.533 percent, reaching the highest in 21 months on its seventh straight advance.
                          Commodities
* West Texas Intermediate crude advanced 1.1 percent to $65.44 a barrel, the largest gain in more than a week.
* Gold fell 0.4 percent to $1,340.07 an ounce.
–With assistance from Samuel Potter and Kailey Leinz.

Have a wonderful evening everyone.

Be magnificent!

As ever,

Carolann

There’s a divinity that shapes our ends,
Rough-hew them how we will.
    -William Shakespeare, 1564-1616, Hamlet.

Carolann Steinhoff, B.Sc., CFP®, CIM, CIWM
Portfolio Manager &
Senior Vice-President

Queensbury Securities Inc.,
St. Andrew’s Square,
Suite 340A, 730 View St.,
Victoria, B.C. V8W 3Y7

Tel: 778.430.5808
(C): 250.881.0801
Toll Free: 1.877.430.5895
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www.carolannsteinhoff.com